Business Property Loan

By: EconomyWatch Content   Date: 4 December 2009

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A business property loan facilitates the acquisition of property to expand one’s business. This type of financing can be used to purchase any type of property for business use. Whether an individual is looking to buy a property to physically build the business, wanting to expand or improve it, a business property loan can prove to be very useful.

Features of Business Property Loans

Business property loans are secured loans that require some collateral. The security or the collateral can be any valuable asset owned by the borrower or the bearer of the loan. Therefore, it is useful to use the business premises or a house as collateral to get a loan. Secured loans offer the benefits of lower interest rates and attractive repayment terms.

A detailed business plan, proof of repayment ability along with the purchase agreements for the property concerned simplify the whole process of taking a property loan. These loans can be fixed rate loans or variable loan rates. They are available from various sources such as banks and lending agencies. The rate of interest on commercial property loans is dependant on the size and the location of the property, the type and the value of the collateral, the amount of the loan and the purpose of buying the property.

These loans can be sanctioned for up to 70%-80% of the purchase price of a property with repayment duration extending up to 25 years.

Benefits of a Business Property Loan

A business property loan results in improved cash flows for the borrower. Instead of using cash resources for purchasing a property, an entrepreneur can take advantage of the same to fund daily operations. It can also be used to carry out other important tasks.

A business property loan leads to ownership of property. Another benefit is that it enables a business to save on rent. An added advantage offered by a business property loan is that the interest payments on it are tax deductible.

These loans are available for a wide variety of properties such as factories, offices, hotels, retail shops, farms, shopping centers and multi-storey apartments.


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